Message from the President
Seizo Ishiguro President & CEO
In the fiscal year that ended on March 31, 2009, our
Group was severely affected by the sudden onset of a
global recession. Our business climate worsened far more
than had been predicted. Not only did domestic and
foreign auto manufacturers reduce their orders, individual
consumption also slumped. The impact of these events
includes the large losses stated in this annual report. We
have paid a ¥10 per stock interim dividend but will not, to
our regret, be paying an end-of-term dividend.
Confronted with these drastic changes in our business
environment, we are taking both defensive and aggressive
steps. Our revised
CHALLENGE 30+
plan calls both
for lowering our break-even point and for urgent steps
to improve our bottom line as part of our strategy for
future growth. By advancing these plans throughout our
company, we are aiming to strengthen our fundamentals
and return to profi tability.
We thank all of our stockholders and count on your
continued support and encouragement.
Consolidated Financial Highlights
For the year
Net sales
Overseas sales
Operating income
Net income
Cash flows from operating activities
Free cash flow
Capital expenditures
R&D expenses
ROA (Return on assets) (%)
ROE (Return on equity) (%)
Amounts per share of common stock
Net income (¥)
Cash dividends applicable to the year (¥)
At year-end
Working capital
Total net assets
Total assets
2008
¥252,072
219,056
7,012
3,554
9,963
-4,138
13,673
29,337
2.0
3.0
50.95
25.00
55,491
116,265
167,785
2007
¥265,055
228,379
10,110
5,729
16,399
4,512
12,620
30,347
3.3
5.0
82.12
25.00
61,175
120,908
181,185
millions of yen2009
$2,002,107
1,698,799
(108,368)
(94,584)
108,724
(22,091)
103,431
287,753
(6.2)
(8.8)
(1.36)
0.10
454,393
1,160,445
1,348,091
thousands of U.S.Dollars2009
¥196,667
166,873
(10,645)
(9,291)
10,680
(2,170)
10,160
28,266
(6.2)
(8.8)
(133.17)
10.00
44,635
96,874
132,423
1. R&D expenses include labor and other expenses reported as cost of sales.
2. Total shareholders' equity and total assets for 2000 are reclassified to conform to the "Standard for Accounting for Transactions by Foreign Currency, etc." effective from the year ended March 31, 2001. Accordingly, ROA and ROE for 2000 are recalculated. With the standard adopted prior to 2001, total shareholders' equity, total assets and shareholders' equity per share of common stock for 2000 were ¥58,533 million, ¥121,694 million and ¥1,019.91, respectively. Also, ROA, ROE and equity ratio for 2000 were 2.6%, 5.7% and 48.1%, respectively.
3. Effective from the year ended March 31, 2007, the Company and its consolidated subsidiaries adopted the new accounting standard for presentation of net assets ("Accounting Standard for Presentation of Net Assets in the Balance Sheet and its Implementation Guidance" issued by the Business Accounting Deliberation Council on December 9, 2005).
Notes:
Years ended March 31, 2007, 2008 and 2009
Net Sales
(Billions of yen)
0 80 160 240 320 400
2007
2008
2009
196.7
252.1
265.1
Total Assets
(Billions of yen)
0 100 200 300 400
132.4
167.8
181.2
-20.00 -16.75 -13.50 -10.25-7.00 -3.75 -0.502.75 6.00Net Income
(Billions of yen)
-9.3
3.6
5.7
Operating Income
(Billions of yen)
-12000 -7200 -2400 2400 7200 12000
-10.6
7.0
10.1
40 60 80 100 120 （％） (year/month) 2008/1 2 3 4 5 6 7 8 9 10 11 12 09/1 2 3
European cars Japanese cars Big Three 60 80 100 120
Sales Down Sharply
Year-on-Year Auto Sales Trends in US Market
30 60 90 120 150 30 60 90 120 150 (year/month) 2008/1 2 3 4 5 6 7 8 9 10 11 12 09/1 2 3
European cars Japanese cars Big Three
Sharp Increase in Inventories
Normal Level
（Days in inventory）
End-of-month US Auto Inventory Trends
250 200 150 100 50 0 -50 2,500 2,000 1,500 1,000 500 0 2008
2007 2009 2010
Sales
(100 million yen ) B.E.P/ Income(100 million yen )
2,700 3,000 1,700 2,000 1,966 2,521 2,600 195 64 ▲50 ▲30 20 200 140 140 Ordinary Income B.E.P./month
B.E.P. lowered 30%
FY08 Plan
FY08 Plan
Business Plan Revisions
During this period the financial crisis that first erupted in the USA drove the global economy into recession. Car
sales, which had been strong, dropped precipitately during the second half. As inventories rose sharply, auto
makers around the world found themselves facing catastrophic conditions.
*Compared to previous fiscal year = 100%
The car electronics industry did not escape the effects of the global recession. Auto manufacturer OEM orders
have slumped dramatically. As a result, we have suffered a 22% year-on-year decline in Alpine’s consolidated
sales, to ¥196.6 billion.
Anticipating continued economic stagnation, we have revised previously released plans to create a system
(personnel, facilities, investments) that would target sales of ¥300 billion in 2010. After reducing sales forecasts
for both 2009 and 2010 by ¥100 billion annually compared to the previous plan, we aim to achieve a 30%
reduction in our break-even point (B.E.P.), primarily by reducing fixed costs.
Dramatically Changing Auto Market
Market Trends
Anticipating growing demand for electric and hybrid vehicles and highly fuel-efficient small cars, Alpine has designated four key
areas for its aggressive growth strategy.
1. On the AVNCD strategy, Alpine will, in addition to systems for
high-end models, focus effort on development of entry-level
equipment with limited feature sets for low-priced cars.
3. Our link strategy will start with the ability to connect to a
wider range of mobile devices, adding value to on-board
equipment, and creating more appealing products.
2010 Profit Growth
Growth Strategies
¥14 billion monthly B.E.P.
Improve development
efficiency Reduce
product costs
Improve indirect productivity
Aggressive Growth Strategy
Defensive 30% Lower Monthly B.E.P.
¥14 Billion Structure
New Customer Business Model Products Matched to Market Changes
Issues
Stronger Order-generating Capability (CTB, GTB)
Lower Product Costs: ¥5 billion Improved Development Efficiency: ¥6 billion
Rethink global staffing Lower salaries and bonuses 50% lower facilities investments
40% lower running costs
Improved Indirect Productivity: ¥15 billion
Integrated Organization
Heightened awareness, faster, slimmer Stronger
Corporate Culture
Alliance Strategy
Tie-ups with partners suitable for themesGreen Strategy
Energy-saving, lighter weight, lower costs
Link Strategy
・Connectivity with consumerelectronics products ・First one added-value products ・OEM orders from market leaders
AVNCD Strategy
High-end・Integrated AVNCD features
・In-car information center
* AVNCD: Audio, Visual, Navigation, Communication, Drive assist Entry-level・For low-priced, small cars
・Limited features
Growth Strategy Aggressive product creation
Since fiscal 2008, the Alpine Group has been executing the
CHALLENGE 30
medium term business plan, a plan to sustain profitability through
accelerated restructuring. Now, in response to a dramatically changed business environment, we are implementing
CHALLENGE 30+
, taking
emergency steps to improve profitability and ensure future growth. The medium term restructuring plan incorporated in
CHALLENGE 30+
calls for
cutting costs a total of ¥26 billion: ¥15 billion through indirect restructuring, ¥5 billion by reducing product-related costs, and ¥6 billion by restructuring R&D.
As defensive measures, we are taking steps to lower our break-even point by 30%, in line with lower sales, and strengthening our corporate
culture. At the same time, we are focusing the company as a whole on achieving an aggressive growth target of ¥20 billion sales in 2010.
Implementing
CHALLENGE 30+
Growth Strategy
Operational Review
In this segment, Alpine’s iPod-LINK Digital media head unit, which was selected for the Fiscal 2008 Good Design Awards (G-Mark) in recognition of its innovative
design, continued to post favorable after-market sales in Japan, the United Sates and Europe. However, sluggish market conditions and intensifying price
competition caused sales of digital media head units to decrease. Such factors also led to a dramatic falloff in sales of our mainstay CD players from the second
half of the fiscal year.
Sales of high-end speakers for minivans also faced challenging conditions during the second half, despite
the favorable record to date resulting from aggressive proposal-based domestic after-market sales.
Genuine products for automobile manufacturers also faced a significant second-half downturn, led by the
impact of cuts in the production of compact cars on orders for CD audio systems. This was in spite of the
excellent reputation for quality of Alpine’s CD audio systems, culminating in a first-place ranking in the North
American Multimedia Quality and Customer Satisfaction Survey.
Furthermore, audio products for the after-market and automobile manufacturers are undergoing structural
changes in the wake of rapid development of products integrating visual and navigation systems. Accordingly,
sales for such integrated products are now accounted for under Information and Communication Equipment.
As a result of the above factors, sales by the Audio Products segment during the term decreased by 28.1%
compared to the corresponding period of the previous fiscal year, to ¥88.4 billion (US$900.0 million).
Audio Products Segment
Driving Mobile Media Solutions
Alpine is committed to offering new and advanced value propositions that will enhance our customers' lifestyles. We will offer
exciting new innovations in all the product categories in which we are active.
Our aim is exciting advances in every product category, products that combine the highest quality and craftsmanship with the most advanced technology,
continuing a tradition that began with our founding in 1967. We got our start in car audio and have since become a leader in car navigation and other
systems that combine audio, visual and communication advances. Now we are moving forward with Drive Assist and other multifunction systems. Through
single-minded focus on equipment for cars, we have accumulated expertise and built a reputation for excellence among auto manufacturers around the
world. Many now turn to us for the OEM equipment they build into their cars. Through consistent leadership in advanced technology, equipment sold
under our own Alpine brand has become the choice of drivers in North America, Europe, Japan, and the rapidly growing economies of Asia.
Information and Communication Products Segment
In this segment, we introduced the wide-screen, high-quality monitor Rear Vision TMX-R1500/ R1100 to boost domestic after-market sales. Attuned to user
needs and facilitating rearseat viewing of terrestrial digital broadcasts and DVDs, this new product was awarded the 2008 Product Grand Prize, sponsored by
the Nikkan Jidosha Shinbun (a national automotive newspaper), for superior product planning and development.
In step with customer lifestyles, Alpine also focused on its solutions business, which contributes to adding higher value to products. Activities included
showcasing the Rear Vision X077, which packages a large, high-resolution screen with a next-generation
car navigation system, at various trade exhibitions. This initiative, targeting minivan users, was successful in
boosting sales. However, deteriorating global market conditions, exacerbated by the widespread adoption of
portable navigation devices (PNDs) that drove down prices, resulted in a decline in after-market sales.
Sales of genuine products for automobile manufacturers also declined, owing to lower sales of luxury and
larger cars in the crucial Notrh American market. A high percentage of these models employ navigation
systems and visual products; accordingly, with sales negatively impacted accordingly. We enjoyed growth
in orders of large-scale systems, centering on car navigation systems, to high-end European automobile
manufacturers. However, production cutbacks by automobile manufacturers from second half led to a falloff
in orders for genuine products. As a result of the above factors, segment sales decreased by 16.1% year on
year, to ¥108.3 billion (US$ 1,102.1 million).
0 50 100 150 200
-4 22 48 74 100
2007 2008 2009
Net Sales Operating Income
135.7 129.0
108.3
8.9 9.5
-3.7 Net Sales/Operating Income
(Billions of yen)
Operational Review
2007 2008 2009
Net Sales Operating Income
129.3 122.9
88.4
10.0 5.4
-0.3
Net Sales/Operating Income
Alpine Introduces the New Rear Vision Navi X08 Premium
Presence at Global Events Enhances Alpine Brand Appeal
While overall car sales in Japan have fallen, sales of minivans, which now
make up a quarter of the market, remain healthy. The minivan is becoming
the standard family car. Alpine quickly recognized and responded to this
auto market trend by introducing Rear Vision, a rear seat entertainment
system combining terrestrial digital broadcasting and DVD and delivering
both with high image quality.
Since the fiscal 2006 introduction of Mobile Media Station X07, Alpine
has continuously won high praise for advanced features and beautiful
screen quality in its car navigation systems. Now the new Rear Vision Navi X08 Premium combines the highly acclaimed Rear
Vision entertainment system with a car navigation system in which both image and sound quality have been further refined. This
remarkable package makes the time that families spend in their treasured minivans even more enjoyable, while at the same time
providing the comfort and security of advanced car navigation.
If forecasts are correct, the auto market will continue to be challenging. Alpine expects to meet that challenge, to strengthen its
brand and to grow its share, by introducing new products tailored to customer needs.
Alpine continues to display its products proactively at motor shows and other major events around the world. The Alpine
booth at the Beijing Motor Show targeted the fast-growing Chinese market. Alpine products were also displayed at the
Consumer Electronics Show in Las Vegas, the world’s largest consumer electronics trade show, and the Bangkok Motor
Show in Thailand. Booths at all three shows powerfully communicated Alpine’s “Driving Mobile Media Solutions” concept.
The auto industry’s business climate is
expected to remain daunting. But this is
a climate in which Alpine, with new hit
products that offer innovative solutions to
meet user needs, can become even more
competitive.
Rear Vision Navi X08
Corporate Social Responsibility (CSR) and Environment-Friendly Activities
Alpine has made protecting the environment a pillar of its CSR policy. We see protecting the environment as a vital part of our mission.
By showing drivers the shortest routes to their destinations, our car navigation systems reduce traffic jams and the amount of time and
fuel expended on the road. By making our equipment as lightweight as possible, we are also helping to improve car fuel efficiency.
In addition, we began last year to take steps to reduce CO
2emissions from the cars in which many of our employees commute
to our Iwaki headquarters. As part of our Eco-Drive campaign, we held
workshops and distributed materials to raise employee consciousness. This
year we are going a step further, promoting eco-friendly cars by providing
priority parking for commuters who use more eco-friendly vehicles.
In addition to protecting the environment, Alpine makes a special effort to
address safety issues in developing new products. We also listen carefully
Global Topics
Beijing Motor Show
Directors and Auditors
Hitoshi Kajiwara Managing Director
Takumi Sato Managing Director
Toji Tanaka Managing Director
Seizo Ishiguro
President & CEO
Toru Usami
Senior Managing Director
Auditors
Kaname Kurashima
Kenji Yoshino
Naotaka Okuyama
Yoshitake Masuda
Directors
Masataka Kataoka
Kenji Igari
Hirofumi Morioka
Satoshi Soma
Shigekazu Hori
Managing Directors
Hitoshi Kajiwara
Toji Tanaka
Takumi Sato
Kazuo Nakamura
(As of June 24, 2009) Toru Usami
Senior Managing Director Seizo Ishiguro
President & CEO
Kazuo Nakamura Managing Director
Financial Section
Financial Highlights
10
Consolidated
Financial Review
12
Consolidated
Balance Sheets
14
Consolidated Statements
of Income
16
Consolidated Statements
of Changes in Net Assets
17
Consolidated Statements
of Cash Flows
18
Notes to Consolidated
Financial Statements
19
Independent Auditors’
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2009
�or the year:
Net sales 176,311 171,084 181,615 196,092 222,367 213,020 222,779 253,983 265,055 252,072 196,667 2,002,107
(Overseas Sales) 122,220 123,893 129,522 157,032 177,017 170,984 180,828 215,281 228,379 219,056 166,873 1,698,799
Operating income(loss) 7,453 6,298 4,445 7,022 12,306 11,320 10,148 9,671 10,110 7,012 (10,645) (108,368)
Net income(loss) 2,650 3,098 3,284 3,914 6,138 7,253 7,932 6,175 5,729 3,554 (9,291) (94,584)
Net cash provided by (used in)
operating activities 13,142 4,622 1,921 15,728 14,389 10,491 12,472 12,887 16,399 9,963 10,680 108,724
Free cash flow 7,107 3,100 (3,602) 8,513 6,290 3,021 3,229 3,032 4,512 (4,138) (2,170) (22,091)
Depreciation 5,351 5,338 5,385 5,552 5,723 6,496 7,332 8,616 9,326 10,655 10,336 105,222
Capital expenditures 5,008 5,607 6,307 6,808 8,218 8,940 10,402 10,778 12,620 13,673 10,160 103,431
R&D expenses 10,781 10,990 12,628 14,718 17,644 19,144 22,438 28,695 30,347 29,337 28,266 287,753
ROA (Return on assets) (%) 2.3 2.6 2.7 2.8 4.1 4.9 5.3 3.8 3.3 2.0 (6.2) (6.2)
ROE (Return on equity) (%) 5.4 5.9 5.4 5.6 8.3 9.4 9.4 6.2 5.0 3.0 (8.8) (8.8)
�t year-end:
Current assets 80,165 81,400 85,046 102,396 106,180 99,031 105,372 109,910 114,938 103,756 75,134 764,878
Total Property, plant and equipment 23,022 22,810 23,649 22,466 22,898 22,714 25,544 27,647 30,090 32,851 28,903 294,238
Current liabilities 54,281 56,092 53,094 55,754 58,669 48,681 50,826 52,173 53,763 48,265 30,499 310,485
Noncurrent liabilities 12,420 6,005 6,403 17,944 15,869 15,534 15,807 5,004 6,514 3,255 5,050 51,410
Capital stock 16,904 18,090 19,928 19,928 20,012 20,026 20,360 25,921 25,921 25,921 25,921 263,881
Retained earnings 17,721 23,365 26,002 29,247 34,393 40,500 47,275 52,213 57,344 58,592 47,839 487,010
Total shareholders' equity 49,879 54,940 67,145 72,467 74,738 80,336 88,830 110,782 — — — —
Total net assets — — — — — — — — 120,908 116,265 96,874 986,196
Total assets 117,613 118,101 127,772 147,412 150,230 145,127 156,507 169,553 181,185 167,785 132,423 1,348,091
Equity ratio (%) 42.7 46.5 52.6 49.2 49.8 55.4 56.7 65.3 65.7 68.5 72.4 72.4
�mounts per share of common stock:
Net income(loss) (¥) 47.96 54.74 56.40 64.49 99.78 117.94 128.97 91.71 82.12 50.95 (133.17) (1.36)
Diluted net income (¥) 44.98 52.04 54.60 — 86.86 102.85 112.58 88.35 — — — —
Dividends from surplus
applicable to the year (¥) 10.00 10.00 10.00 12.50 17.50 17.50 20.00 20.00 25.00 25.00 10.00 0.10
Shareholders' equity (¥) 914.18 957.30 1,106.38 1,194.19 1,227.79 1,319.41 1,446.99 1,587.05 1,706.54 1,646.38 1,374.95 14.00
Notes: 1. R&D expenses include labor and other expenses reported as cost of sales.
2. Total shareholders' equity and total assets for 2000 are reclassified to conform to the "Standard for Accounting for Transactions by Foreign Currency, etc." effective from the year ended March 31, 2001. Accordingly, ROA and ROE for 2000 are recalculated. With the standard adopted prior to 2001, total shareholders' equity, total assets and shareholders' equity per share of common stock for 2000 were ¥58,533 million, ¥121,694 million and ¥1,019.91, respectively. Also, ROA, ROE and equity ratio for 2000 were 2.6%, 5.7% and 48.1%, respectively.
Millions of Yen, unless stated otherwise Thousands of U.S Dollars
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2009
�or the year:
Net sales 176,311 171,084 181,615 196,092 222,367 213,020 222,779 253,983 265,055 252,072 196,667 2,002,107
(Overseas Sales) 122,220 123,893 129,522 157,032 177,017 170,984 180,828 215,281 228,379 219,056 166,873 1,698,799
Operating income(loss) 7,453 6,298 4,445 7,022 12,306 11,320 10,148 9,671 10,110 7,012 (10,645) (108,368)
Net income(loss) 2,650 3,098 3,284 3,914 6,138 7,253 7,932 6,175 5,729 3,554 (9,291) (94,584)
Net cash provided by (used in)
operating activities 13,142 4,622 1,921 15,728 14,389 10,491 12,472 12,887 16,399 9,963 10,680 108,724
Free cash flow 7,107 3,100 (3,602) 8,513 6,290 3,021 3,229 3,032 4,512 (4,138) (2,170) (22,091)
Depreciation 5,351 5,338 5,385 5,552 5,723 6,496 7,332 8,616 9,326 10,655 10,336 105,222
Capital expenditures 5,008 5,607 6,307 6,808 8,218 8,940 10,402 10,778 12,620 13,673 10,160 103,431
R&D expenses 10,781 10,990 12,628 14,718 17,644 19,144 22,438 28,695 30,347 29,337 28,266 287,753
ROA (Return on assets) (%) 2.3 2.6 2.7 2.8 4.1 4.9 5.3 3.8 3.3 2.0 (6.2) (6.2)
ROE (Return on equity) (%) 5.4 5.9 5.4 5.6 8.3 9.4 9.4 6.2 5.0 3.0 (8.8) (8.8)
�t year-end:
Current assets 80,165 81,400 85,046 102,396 106,180 99,031 105,372 109,910 114,938 103,756 75,134 764,878
Total Property, plant and equipment 23,022 22,810 23,649 22,466 22,898 22,714 25,544 27,647 30,090 32,851 28,903 294,238
Current liabilities 54,281 56,092 53,094 55,754 58,669 48,681 50,826 52,173 53,763 48,265 30,499 310,485
Noncurrent liabilities 12,420 6,005 6,403 17,944 15,869 15,534 15,807 5,004 6,514 3,255 5,050 51,410
Capital stock 16,904 18,090 19,928 19,928 20,012 20,026 20,360 25,921 25,921 25,921 25,921 263,881
Retained earnings 17,721 23,365 26,002 29,247 34,393 40,500 47,275 52,213 57,344 58,592 47,839 487,010
Total shareholders' equity 49,879 54,940 67,145 72,467 74,738 80,336 88,830 110,782 — — — —
Total net assets — — — — — — — — 120,908 116,265 96,874 986,196
Total assets 117,613 118,101 127,772 147,412 150,230 145,127 156,507 169,553 181,185 167,785 132,423 1,348,091
Equity ratio (%) 42.7 46.5 52.6 49.2 49.8 55.4 56.7 65.3 65.7 68.5 72.4 72.4
�mounts per share of common stock:
Net income(loss) (¥) 47.96 54.74 56.40 64.49 99.78 117.94 128.97 91.71 82.12 50.95 (133.17) (1.36)
Diluted net income (¥) 44.98 52.04 54.60 — 86.86 102.85 112.58 88.35 — — — —
Dividends from surplus
applicable to the year (¥) 10.00 10.00 10.00 12.50 17.50 17.50 20.00 20.00 25.00 25.00 10.00 0.10
Shareholders' equity (¥) 914.18 957.30 1,106.38 1,194.19 1,227.79 1,319.41 1,446.99 1,587.05 1,706.54 1,646.38 1,374.95 14.00
Reviewing the world economy in the fiscal year ended March 31, 2009, financial instability extended throughout the world economy, triggered by the subprime mortgage problem in the United States, with the severity of conditions snowballing from the second half onwards. As a result, the automobile industry, hitherto riding on robust growth, suffered sudden cutbacks in sales and production on a global scale, heralding a crisis of unparalleled proportions. The world’s 12 leading automobile manufactures posted a 5.8% decrease in cumulative monthly sales of new cars for 2008. In North America market, monthly new car sales were down between 30% and 40% compared with the corresponding month of the previous fiscal year, showing a depression without a precedent.
The car electronics industry was hit by the global slowdown in demand for new cars, manifest in a drastic reduction in orders from automobile manufacturers. In addition, falling personal consumption arising from uncertainty about the future led to a harsh after-market sales environment.
In response to this business environment, the Alpine Group is promoting its 11th mid-term business plan, “CHALLENGE 30”, to step up structural reforms and thus maintain earnings. However, in response to the drastically deteriorating operating environment, we have instigated “CHALLENGE 30 Plus”, comprising new emergency measures to improve profits and growth-oriented measures that will propel us forward in building our business base.
Performance by Segment
Audio Products
In this segment, Alpine’s iPod-LINK Digital media head unit, which was selected for the Fiscal 2008 Good Design Awards (G-Mark) in recognition of its innovative design, continued to post favorable after-market sales in Japan, the United Sates and Europe. However, sluggish market conditions and intensifying price competition caused sales of digital media head units to decrease. Such factors also led to a dramatic falloff in sales of our mainstay CD players from the second half of the fiscal year.
Sales of high-end speakers for minivans also faced challenging conditions during the second half, despite the favorable record to date resulting from aggressive proposal-based domestic after-market sales.
Genuine products for automobile manufacturers also faced a significant second-half downturn, led by the impact of cuts in the production of compact cars on orders for CD audio systems. This was in spite of the excellent reputation for quality of Alpine’s CD audio systems, culminating in a first-place ranking in the North American Multimedia Quality and Customer Satisfaction Survey.
Furthermore, audio product for the after-market and automobile manufacturers are undergoing structural changes in the wake of rapid development of products integrating visual and navigation systems. Accordingly, sales for such integrated products are now accounted for under Information and Communication Equipment.
As a result of the above factors, sales by the Audio Products segment during the term decreased by 28.1% compared to the corresponding period of the previous fiscal year, to ¥88.4 billion (US$900.0 million).
Information and Communication Equipment Segment
In this segment, we introduced the wide-screen, high-quality monitor Rear Vision TMX-R1500/ R1100 to boost domestic after-market sales. Attuned to user needs and facilitating rear-seat viewing of terrestrial digital broadcasts and DVDs, this new product was awarded the 2008 Product Grand Prize, sponsored by the Nikkan Jidosha Shinbun (a national automotive newspaper), for superior product planning and development.
In step with customer lifestyles, Alpine also focused on its solutions business, which contributes to adding higher value to products. Activities included showcasing the Rear Vision X077, which packages a large, high-resolution screen with a next-generation car navigation system, at various trade exhibitions. This initiative, targeting minivan users, was successful in boosting sales. However, deteriorating global market conditions, exacerbated by the widespread adoption of portable navigation devices (PNDs) that drove down prices, resulted in a decline in after-market sales.
Sales of genuine products for automobile manufacturers also declined, owing to lower sales of luxury and larger cars in the crucial Notrh American market. A high percentage of these models employ navigation systems and visual products; accordingly, with sales negatively impacted accordingly. We enjoyed growth in orders of large-scale systems, centering on car navigation systems, to high-end European automobile manufacturers. However, production cutbacks by automobile manufacturers from second half led to a falloff in orders for genuine
Overseas Sales
(Millions of yen)
2005 2006 180,828 2007 215,281 2008 228,379 2009 166,873 219,056
�apital E�penditures
(Millions of yen)
2005 2006 10,402 2007 10,778 2008 12,620 2009 10,160 13,673
�otal �ssets�Net �ssets
(Millions of yen)
2005 181,185 120,908 2006 2007 156,507 89,874 2008 169,553 112,377 2009 132,423 96,874 167,785 116,265 Total Assets Net Assets
Net Assets for the years from 2005 to 2006 are recalculated.
products.
As a result of the above factors, segment sales decreased by 16.1% year on year, to ¥108.3 billion (US$ 1,102.1 million).
Under these circumstances, compounded by the strength of the yen, the Company posted consolidated net sales of ¥196.7 billion (US$2,002.1 million) for the year ended March 31, 2009, down 22.0% compared with the previous fiscal year. As a result of worsening rates of capacity utilization of factories accompanying the volatile environment and unachieved cost reduction programs, the operating loss stood at ¥10.6 billion (US$108.4 million), compared with ¥7.0 billion (US$71.4 million) in operating income for the previous fiscal year. Loss on valuation of noncurrent assets and reversal of deferred income tax assets raised corporate and other taxes, leading to net loss for the year of ¥9.3 billion compared to net income of ¥3.6 billion in the previous fiscal year.
In light of the changes that have occurred since making our original forecasts and the substantial we have been compelled to post, we refrained from paying year-end dividends. The number of consolidated subsidiaries is 27 companies, with 8 companies in Japan and 19 overseas. The number of companies accounted for by the equity method at the end of the fiscal year is 1.
Investment
Capital expenditures decreased by 25.7% to ¥10,160 million (US$103.4 million). By segment, investment in the Audio Products business totaled ¥5,323 million (US$54.2 million), and that in the Information and Communication Equipment business amounted to ¥4,831 million (US$49.2 million).
R&D expenses decreased by 3.7% to ¥28,266 million (US$287.8 million). R&D expenses amounted to 14.4% of net sales, up 2.8 percentage points.
Cash Flows
For the fiscal year under review, cash and cash equivalents at the end of the period totaled ¥26,141 million (US$266.1 million), a decrease of ¥4,018 million (US$40.9 million), or 13.3%, compared with the previous fiscal year-end.
Cash flows from operating activities
Net cash provided by operating activities amounted to ¥10,680 million (US$108.7 million), an increase of 7.2%. This was mainly the result of inflows provided by loss before income taxes and minority interests of ¥4,035 million (US$41.1 million), depreciation and amortization of ¥10,336 million (US$105.2 million) and decrease in notes and accounts receivable of ¥10,241 million (US$104.3 million), decrease in notes and accounts payable of ¥9,234 million (US$94.0 million), and Income taxes paid of ¥1,669 million (US$17.0 million) from the payment of income and other taxes.
Cash flows from investing activities
Net cash used in investing activities was ¥12,850 million (US$130.8 million), down 8.9% compared with the previous fiscal year. Principal components were payments for the acquisition of tangible and intangible fixed assets of ¥7,139 million (US$72.7 million) and ¥3,156 million (US$32.1 million), respectively.
Cash flows from financing activities
Net cash used in financing activities totaled ¥329 million (US$3.3 million), down 85.6%. The principal component was cash dividends paid of ¥1,744 million (US$17.8 million) and net increase in short-term loans payable of ¥1,576 million (US$16.0 million).
Financial Position
Total assets at the end of the year decreased by 21.1% to ¥132,423 million (US$1,348.1 million), primarily due to a decrease in cash and cash equivalents, notes and accounts receivable, and investment in securities. As a result of the decrease in unrealized holding gains on securities and foreign currency translation adjustment, total net assets decreased by 16.7% to ¥96,874 million (US$986.2 million). The equity ratio rose 3.9 percentage points to 72.4%.
�ash �lo�s
(Millions of yen)
2005 3,032 2006 2007 12,472 2008 12,887 3,229 2009 16,399 4,512 9,963 (4,138) 10,680 (2,170)
Cash Flows from Operating Activity Free Cash Flow
�eturn on Equity��eturn on �ssets
(%) 2005 3.8 2006 2007 9.4 2008 6.2 5.3 2009 5.0 3.3 (6.2) 3.0 (8.8) 2.0
Return on Equity Ruturn on Assets
See accompanying notes
TOTAL ASSETS 2009 2008 2009
Current assets:
Cash and cash equivalents ¥ 26,141 ¥ 30,159 $ 266,120
Notes and accounts receivable-trade:
Unconsolidated subsidiaries and affiliates 860 1,291 8,755
Trade 17,194 30,535 175,038
Allowance for doubtful accounts (768) (788) (7,818)
Inventories (Note 4) 19,077 28,467 194,207
Deferred tax assets (Note 9) 1,431 3,338 14,568
Other 11,199 10,754 114,008
Total current assets 75,134 103,756 764,878
Property, plant and equipment
Land 5,005 5,136 50,952
Buildings and structures 23,324 23,021 237,443
Machinery, equipment and vehicles 67,165 69,412 683,752
Lease assets 542 — 5,518
Construction in progress 400 1,359 4,072
96,436 98,928 981,737
Accumulated depreciation (67,533) (66,077) (687,499)
Total property, plant and equipment 28,903 32,851 294,238
Investments and other assets:
Investments in subsidiaries and affiliates (Note 3) 8,160 8,252 83,070
Investments (Note 3) 9,526 12,108 96,977
Deferred tax assets (Note 9) 328 351 3,339
Other 10,372 10,467 105,589
Total investments and other assets 28,386 31,178 288,975
¥132,423 ¥167,785 $1,348,091
Thousands of U.S. Dollars (Note 1) Millions of Yen
March 31, 2009 and 2008 ALPINE ELECTRONICS, INC.
See accompanying notes
TOTAL LIABILITIES AND NET ASSETS 2009 2008 2009
Current liabilities:
Short-term loans payable (Note 5) ¥ 1,622 ¥ 216 $ 16,512
Notes and accounts payable-trade:
Unconsolidated subsidiaries and affiliates 551 1,686 5,609
Trade 11,883 24,675 120,971
Income taxes payable (Note 9) 369 811 3,756
Accrued expenses 9,321 11,926 94,890
Deferred tax liabilities (Note 9) 70 129 713
Provision for product warranties 3,545 4,822 36,089
Other 3,138 4,000 31,945
Total current liabilities 30,499 48,265 310,485
Noncurrent liabilities:
Provision for retirement benefits (Note 7) 632 669 6,434
Provision for directors' retirement benefits 733 705 7,462
Deferred tax liabilities (Note 9) 2,932 1,283 29,848
Other 753 598 7,666
Total noncurrent liabilities 5,050 3,255 51,410
Contingent liabilities (Note 6)
Net Assets (Note 8):
Capital stock:
Authorized —160,000,000 shares
Issued —69,784,501 shares 25,921 25,921 263,881
Capital surplus 24,906 24,906 253,548
Retained earnings 47,839 58,592 487,010
Treasury stock (29) (31) (295)
Valuation difference on available-for-sale securities 3,090 4,753 31,457
Revaluation reserve for land (1,395) (1,395) (14,201)
Foreign currency translation adjustment (4,409) 2,112 (44,885)
Minority interests 951 1,407 9,681
Total net assets 96,874 116,265 986,196
¥132,423 ¥167,785 $1,348,091
See accompanying notes
2009 2008 2007 2009
Net sales (Note 12) ¥196,667 ¥252,072 ¥265,055 $2,002,107
Costs and expenses (Note 12):
Cost of sales 171,519 204,738 211,085 1,746,096
Selling, general and administrative expenses 35,793 40,322 43,860 364,379
207,312 245,060 254,945 2,110,475
Operating income(loss) (Note 12) (10,645) 7,012 10,110 (108,368)
Other income (expenses):
Interest and dividend income 752 930 736 7,655
Interest expense (122) (171) (128) (1,242)
Foreign exchange gains (losses) 3,528 (1,926) 788 35,916
Equity in earnings of affiliates 1,143 1,047 677 11,636
Loss on sales and retirement of noncurrent assets (343) (343) (262) (3,492)
Gain on sales of investment securities 118 51 — 1,201
Loss on valuation of investment securities (52) (256) (120) (529)
Prior compensation expense for products — — (935) —
Provision for product warranties — — (297) —
Gain on valuation of options 2,578 — — 26,245
Loss on valuation of inventories (1,091) — — (11,107)
Loss on valuation of noncurrent assets (493) — — (5,019)
Other 592 1 (267) 6,027
6,610 (667) 192 67,291
Income(loss) before income taxes and minority interests (4,035) 6,345 10,302 (41,077)
Income taxes (Note 9):
Current 30 2,930 4,738 305
Deferred 5,103 (298) (372) 51,950
5,133 2,632 4,366 52,255
Income(loss) before minority interests (9,168) 3,713 5,936 (93,332)
Minority interests in income (123) (159) (207) (1,252)
Net income(loss) ¥ (9,291) ¥ 3,554 ¥ 5,729 $ (94,584)
Thousands of U.S. Dollars (Note 1) Millions of Yen
Years ended March 31, 2009, 2008 and 2007 ALPINE ELECTRONICS, INC.
2009 2008 2007 2009
Amounts per share of common stock:
Net income(loss) ¥(133.17) ¥50.95 ¥82.12 $(1.36)
Diluted net income — — — —
Dividends from surplus applicable to the year 10.00 25.00 25.00 0.10
U.S. Dollars (Note 1) Yen
ALPINE ELECTRONICS, INC.
Years ended March 31, 2009, 2008 and 2007
Capital
stock surplusCapital Retainedearnings
Revaluation reserve for
land Valuation difference on available-for-sale
securities
Foreign currency translation adjustment Treasury
stock
Millions of Yen
Minority interests Total
Shareholders' equity at March 31, 2006 ¥25,921 ¥24,906 ¥52,213 ¥(27) ¥7,124 ¥(1,395) ¥ 2,040 ¥ — ¥110,782 Reclassification due to adoption of new accounting standards for
presentation of net assets in the balance sheet at April 1, 2006 1,594 1,594
Net Assets at April 1, 2006 25,921 24,906 52,213 (27) 7,124 (1,395) 2,040 1,594 112,376
Net income 5,729 5,729
Change in equity affiliate accounted for by equity
method-retained earnings 513 513
Purchase of treasury stock (3) (3)
Disposal of treasury stock 0 0 0
Dividends from surplus (¥20.0 per share) (1,395) (1,395)
Directors' Bonuses (60) (60)
Other 344 665 2,481 258 3,748
Balance at March 31, 2007 25,921 24,906 57,344 (30) 7,789 (1,395) 4,521 1,852 120,908
Net income 3,554 3,554
Change in equity affiliate accounted for
by equity method-retained earnings (611) (611)
Purchase of treasury stock (1) (1)
Disposal of treasury stock 0 0 0
Dividends from surplus (¥25.0 per share) (1,744) (1,744)
Other 49 (3,036) (2,409) (445) (5,841)
Balance at March 31, 2008 25,921 24,906 58,592 (31) 4,753 (1,395) 2,112 1,407 116,265
Net income(loss) (9,291) (9,291)
Effect of changes in accounting policies
applied to foreign subsidiaries 282 282
Purchase of treasury stock (0) (0)
Disposal of treasury stock (0) 2 2
Dividends from surplus (¥25.0 per share) (1,744) (1,744)
Other 0 (0) (1,663) (6,521) (456) (8,640)
Balance at March 31, 2009 ¥25,921 ¥24,906 ¥47,839 ¥(29) ¥3,090 ¥(1,395) ¥(4,409) ¥ 951 ¥ 96,874
Capital
stock surplusCapital Retainedearnings
Revaluation reserve for
land Valuation difference on available-for-sale
securities
Foreign currency translation adjustment Treasury
stock
Thousands of U.S.Dollars (Note 1)
Minority interests Total
Balance at March 31, 2008 $263,881 $253,548 $596,477 $(315) $48,386 $(14,201) $21,501 $ 14,323 $1,183,600
Net income(loss) (94,584) (94,584)
Effect of changes in accounting policies
applied to foreign subsidiaries 2,871 2,871
Purchase of treasury stock (0) (0)
Disposal of treasury stock (0) 20 20
Dividends from surplus ($0.25 per share) (17,754) (17,754)
Other 0 (0) (16,929) (66,386) (4,642) (87,957)
Balance at March 31, 2009 $263,881 $253,548 $487,010 $(295) $31,457 $(14,201) $(44,885) $ 9,681 $ 986,196
Notes: 1. Dividends from surplus per share is calculated based on actual payment of dividends during the period.
See accompanying notes
2009 2008 2007 2009
Cash flows from operating activities:
Income (loss) before income taxes and minority interests ¥ (4,035) ¥ 6,345 ¥ 10,302 $ (41,077)
Adjustments to reconcile income before income taxes and minority interests to cash provided by operating activities:
Depreciation and amortization (Note 12) 10,336 10,655 9,326 105,222
Increase (decrease) in provision for retirement benefits (16) 45 8 (163)
Increase (decrease) in provision for directors' retirement benefits 28 (14) 83 285
Interest and dividends income (752) (930) (735) (7,655)
IInterest expenses 122 169 126 1,242
Equity in earnings of affiliates (1,143) (1,047) (677) (11,636)
Loss on sale of property, plant and equipment 11 6 11 112
Prior compensation expenses for products — — 935 —
Decrease in notes and accounts receivable-trade 10,241 5,779 3,504 104,255
Decrease (increase) in inventories 6,349 (1,020) 1,129 64,634
Decrease in notes and accounts payable-trade (9,234) (1,624) (2,307) (94,003)
Increase (decrease) in provision for product warranties (814) (501) 903 (8,286)
Gain on valuation of options (2,578) — — (26,245)
Other-net 2,133 (3,383) (2,191) 21,714
Subtotal 10,648 14,480 20,417 108,399
Interest and dividends income received 783 927 735 7,971
Interest expenses paid (119) (169) (126) (1,212)
Income taxes paid (1,669) (5,275) (3,692) (16,991)
Income taxes refund 1,037 — — 10,557
Payments for Prior compensation expenses for products — — (935) —
Net cash provided by operating activities 10,680 9,963 16,399 108,724
Cash flows from investing activities:
Purchase of property, plant and equipment (7,139) (11,029) (8,573) (72,676)
Proceeds from sales of property, plant and equipment 88 27 100 896
Purchase of intangible assets (3,156) (2,945) (3,593) (32,129)
Proceeds from sales of investment securities 131 247 0 1,334
Purchase of stocks of subsidiaries and affiliates (245) — — (2,494)
Purchase of investments in subsidiaries (544) — — (5,538)
Payments of loans receivable (1,858) (61) (47) (18,915)
Collection of loans receivable 66 38 49 672
Other-net (193) (378) 177 (1,965)
Net cash used in investment activities (12,850) (14,101) (11,887) (130,815)
Cash flows from financing activities:
Net increase (decrease) in short-term loans payable 1,576 34 (113) 16,044
Repayment of long-term loans payable — — (7) —
Cash dividends paid (1,744) (1,744) (1,395) (17,754)
Cash dividends paid to minority shareholders (16) (189) (82) (163)
Liquidating dividends paid to minority shareholders — (452) — —
Proceeds from stock issuance to minority shareholders — 63 59 —
Other—net (145) (2) (3) (1,476)
Net cash used in financing activities (329) (2,290) (1,541) (3,349)
Effect of exchange rate change on cash and cash equivalents (1,519) (1,017) 1,139 (15,464) Net increase (decrease) in cash and cash equivalents (4,018) (7,445) 4,110 (40,904) Cash and cash equivalents at beginning of period 30,159 37,507 33,207 307,024 Increase in cash and cash equivalents resulting from inclusion of
additional subsidiaries in the consolidation — — 163 — Increase in cash and cash equivalents resulting from merger
of consolidated and unconsolidated subsidiaries — 97 27 — Cash and cash equivalents at end of period ¥ 26,141 ¥ 30,159 ¥ 37,507 $ 266,120
Thousands of U.S. Dollars (Note 1) Millions of Yen
Years ended March 31, 2009, 2008 and 2007 ALPINE ELECTRONICS, INC.
March 31, 2009, 2008 and 2007 ALPINE ELECTRONICS, INC.
1. Basis for Presenting Consolidated Financial Statements
Alpine Electronics, Inc. (“the Company”), a Japanese corporation, is a subsidiary of Alps Electric Co., Ltd. (40.7% owned), a Japanese listed company. The accompanying consolidated financial statements have been prepared in accordance with the provisions set forth in the Japanese Financial Instruments and Exchange Law and its related accounting regulations, and in conformity with accounting principles generally accepted in Japan (“Japanese GAAP”), which are different in certain respects as to application and disclosure requirements of International Financial Reporting Standards. The accounts of overseas subsidiaries are based on their accounting records maintained in conformity with generally accepted accounting principles prevailing in the respective countries of domicile. However, as described in Note 2(21), necessary adjustments are made upon consolidation.
The accompanying consolidated financial statements have been restructured and translated into English (with some expanded descriptions
and the inclusion of consolidated statements of changes in net assets) from the consolidated financial statements of the Company prepared in accordance with Japanese GAAP and filed with the appropriate Local Finance Bureau of the Ministry of Finance as required by the Financial Instruments and Exchange Law. Some supplementary information included in the statutory Japanese language consolidated financial statements, but not required for fair presentation, is not presented in the accompanying consolidated financial statements.
The translations of the Japanese yen amounts into U.S. dollars are included solely for the convenience of readers outside Japan, using the prevailing exchange rate at March 31, 2009, which was ¥98.23 to U.S.$1. The convenience translations should not be construed as representations that the Japanese yen amounts have been, could have been, or could in the future be, converted into U.S. dollars at this or any other rate of exchange.
2. Summary of Significant Accounting Policies
(1) Consolidation
The consolidated financial statements include the accounts of the Company and substantially all of its subsidiaries (“the Companies”) which are controlled through substantial ownership of majority voting rights or existence of certain conditions. All significant intercompany transactions and account balances are eliminated in consolidation.
During the fiscal year ended March 31, 2009, one subsidiary was excluded in consolidation due to the liquidation and one subsidiary was added in consolidation due to the establishment.
(2) Equity method
Investment securities in affiliates (all companies 20% to 50% owned and certain others 15% to 20% owned) are accounted for by the equity method in the consolidated financial statements for 2009, 2008 and 2007.
(3) Cash and cash equivalents
In preparing the consolidated statements of cash flows, cash on hand, readily-available deposits and short-term highly liquid investments with maturities of not exceeding three months at the time of purchase are considered to be cash and cash equivalents.
(4) Securities
The intent of holding each security is examined and securities are classified as (a) securities held for trading purposes (hereafter, “trading securities”), (b) debt securities intended to be held to maturity (hereafter, “held-to-maturity debt securities”), (c) equity securities issued by subsidiaries and affiliates, and (d) for all other securities that are not classified in any of the above categories (hereafter, “available-for-sale securities”).
The Companies had no trading securities or held-to-maturity debt securities. Equity securities issued by subsidiaries and affiliates which are not consolidated or accounted for using the equity method are stated at moving-average cost. Available-for-sale securities with fair market value are stated at fair market value. Unrealized holding gains and losses on these securities are reported, net of applicable income taxes, as a separate component of the net assets. Realized gain on sale of such
If the market value of equity securities issued by subsidiaries and affiliates which are not consolidated or on the equity method and available-for-sale securities declines significantly, such securities are stated at fair market value and the difference between the fair market value and the carrying amount is recognized as loss in the period of the decline. If the fair market value of equity securities issued by subsidiaries and affiliates is not readily available, such securities should be written down to net asset value in the event net asset value has significantly declined. Unrealized losses on these securities are reported in the statements of operations.
(5) Allowance for doubtful accounts
The Companies provide allowance for doubtful accounts to cover probable losses on collection by estimating uncollectible amounts individually in addition to amounts for possible losses on collection in the past.
(6) Inventories
Inventories held by the Company and its domestic consolidated subsidiaries are principally stated at cost determined by the weighted-average method. The value in the balance sheet is calculated by the method of write-down of the carrying amount based on the decline of the profitability.
Inventories held by the foreign consolidated subsidiaries are principally stated at the lower of market or cost, mainly determined by the weighted-average method or the moving-weighted-average method.
Effective from the year ended March 31, 2009, the Company and its domestic consolidated subsidiaries adopted the new accounting standard, “Accounting Standard for Measurement of Inventories” (Statement No.9 issued by the Accounting Standards Board of Japan on July 5, 2006). As a result of the adopting the standard, operating loss decreased by ¥31 million (US$316 thousand) and loss before income taxes and minority interests increased by ¥1,060 million (US$10,791 thousand) for the fiscal year ended March 31, 2009.
In addition, as a result of reviewing the classification by adopting the standard, the classification for Loss on abandonment of inventories was changed from Selling, general and administrative expenses to Cost of sales as same as Loss on valuation of inventories due to a minor
As a result of the changing the classification, in comparison to the previous accounting method, cost of sales increased by ¥99 million (US$1,008 thousand) and gross margin decreased by same amount and operating loss and loss before income taxes and minority interests were no impact.
(7) Property, plant, equipment and depreciation
Property, plant and equipment are stated at cost except for certain land. The Companies compute depreciation of property, plant and equipment, except for certain buildings, using the declining-balance method at rates based on the useful lives prescribed by Japanese tax regulations, while overseas consolidated subsidiaries use the straight-line method over the estimated useful lives.
Depreciation of buildings purchased after March 31, 1998, is computed using the straight-line method by the Company and its domestic subsidiaries, because of an amendment to Japanese tax regulations. From the year ended March 31, 2008, in accordance with the amendment to the Corporate Tax Law, the Company and its consolidated domestic subsidiaries changed their depreciation method for tangible fixed assets acquired on or after April 1, 2007 to a method based on the amended Corporate Tax Law.
As a result, in comparison to the previous accounting method, operating income and income before taxes and minority interests decreased by ¥164 million for the fiscal year ended March 31, 2008.
In addition, due to the amendment to the Corporate Tax Law, for tangible fixed assets which had been acquired on or before March 31, 2007, the remaining book value of the assets based on the previous Corporate Tax Law is evenly depreciated over the five years starting from the period subsequent to the year the depreciable limits have reached.
As a result, in comparison to the previous accounting method, operating income and income before taxes and minority interests decreased by ¥97 million for the fiscal year ended March 31, 2008.
From the year ended March 31, 2009, in accordance with the amendment to the Corporate Tax Law, the Company and its domestic consolidated subsidiaries changed the useful lives of machinery from 8-10 years to 7 years.
As a result, in comparison to the previous accounting method, operating loss and loss before income taxes and minority interests increased by ¥142 million (US$ 1,446 thousand) for the fiscal year ended March 31, 2009.
Regarding the depreciation method for lease assets related to finance lease transactions do not transfer ownership to the lessee, the Company and its consolidated subsidiaries adopt the straight-line method that assumes the years of service lives are lease periods and residual values are zero.
The Company and its consolidated subsidiaries formerly used accounting procedures that conform to methods related to normal lease transactions with respect to finance lease transactions do not transfer ownership to the lessee.
Effective from the year ended March 31, 2009, the Company and its consolidated subsidiaries adopted "Accounting Standard for Lease Transactions"(Statement No.13 originally issued on June 17, 1993 by the First Committee of the Business Accounting Council and revised on March 30, 2007) and "Guidance on Accounting Standard for Lease Transactions "(Guidance No.16 originally issued on January 18, 1994 by the Accounting System Committee of the Japanese Institute of Certified Public Accountants and revised on March 30, 2007) and use accounting
procedures conforming to methods related to normal sales and purchase transactions.
The Company and its consolidated subsidiaries will continue to use accounting procedures that conform to methods related to normal lease transactions with respect to finance lease transactions do not transfer ownership to the lessee start date prior to the initial year of application of the new method.
The impact on operating loss and loss before income taxes and minority interests is minor.
Estimated useful lives are as follows: Buildings 2 – 50 years Machinery 2 – 15 years Equipment 2 – 25 years (Dies 1 – 2 year)
(8) Land revaluation
Pursuant to “Law Concerning Revaluation of Land” and the revisions thereof, the Company elected one-time revaluation of land used for business operations at fair value as of March 31, 2002. Due to the revaluation, book value of the land was reduced by ¥1,395 million to ¥3,212 million as of March 31, 2002, and the related unrealized loss is reported as a separate component of net assets. According to the revised Law, the Company is not permitted to revalue the land at any time for subsequent declines or appreciation in the fair values of the land. The excess of the revalued amounts of the revalued land over the fair values as of March 31, 2009 and 2008 amounted to ¥1,131 million (US$11,514 thousand) and ¥1,063 million, respectively.
(9) Employees’ bonuses
Liabilities for employees’ bonuses are mainly provided based on the estimate of the amounts to be paid in the future, based on the accrual basis at the balance sheet date.
(10) Directors’ bonuses
Liabilities for directors’ bonuses are mainly provided based on the estimate of the amounts to be paid in the future, based on the accrual basis at the balance sheet date.
Effective from the year ended March 31, 2007, the Company adopted the new accounting standard for directors’ bonuses (“Accounting Standard for Directors’ Bonuses” issued by the Accounting Standards Board of Japan). Under this standard, directors’ bonuses are expensed as incurred and shown under selling, general and administrative expenses, whereas the Company previously accounted for them as a deduction of retained earnings.
As a result of the adopting the standard and guidance, operating income and income before income taxes and minority interests for the fiscal year ended March 31, 2007 decreased by ¥63 million.
(11) Provision for retirement benefits
The Company and its five domestic subsidiaries have unfunded lump-sum benefit and funded pension plans covering all employees. Under the terms of the plans, eligible employees are entitled, upon reaching mandatory retirement age or earlier voluntary severance, to severance and retirement benefit payments based on the length of their services, base salary at the time of termination and cause of termination.
determined based on the amounts actuarially calculated using certain assumptions. The Companies provide allowance for employees’ severance and retirement benefits based on the estimated amount of projected benefit obligation and the fair value of the plan assets at the balance sheet date.
(12) Provision for directors’ retirement benefits
The Company and its domestic consolidated subsidiaries provide for retirement benefits for directors, based on the bylaws and on the accrual basis at the balance sheet date.
(13) Provision for product warranties
The Company and certain of its consolidated subsidiaries provide accrued warranty costs for goods sold based on historical experience of actual after-sales service costs.
(14) Foreign currency translation
Receivables, payables and investments denominated in foreign currencies are translated into Japanese yen using the exchange rate at the balance sheet date, except that investments in unconsolidated subsidiaries and affiliated companies are translated using the historical rates. The Company and its domestic subsidiaries include foreign currency translation adjustments in the net assets in the consolidated balance sheets. Financial statements of overseas consolidated subsidiaries are translated into Japanese yen using the year-end rate for assets and liabilities, except that net assets accounts and investments in unconsolidated subsidiaries and affiliated companies not on the equity method are translated using the historical rates. The average exchange rate for the year is used for translation of income and expenses.
(15) Research and development costs
Research and development costs are charged to income when incurred and included in costs and expenses.
(16) Income taxes
The Companies recognize tax effects of temporary differences between the financial statement carrying amounts and the tax basis of assets and liabilities. The provision for income taxes is computed based on the pretax income included in the consolidated statements of operations. The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences.
(17) Amounts per share of common stock
Computations of net income per share of common stock are based on the weighted-average number of shares of common stock outstanding during each fiscal year.
Diluted net income per share is computed based on the weighted-average number of common stock and contingent issuance of common stock from convertible debentures.
Cash dividends per share represent actual amounts applicable to the respective years.
(18) Software costs
The Company included software in other assets and depreciated it using the straight-line method over the estimated useful lives (from three to five years).
(19) Derivative transactions and hedge accounting
The Companies state derivative financial instruments at fair value and recognize changes in the fair value as gains or losses unless derivative financial instruments are used for hedging purposes.
If derivative financial instruments are used as hedges and meet certain hedging criteria, the Companies defer recognition of gains or losses resulting from changes in fair value of derivative financial instruments until the related losses or gains on the hedged items are recognized.
(20) Reclassifications
Certain prior year amounts have been reclassified to conform to the 2008 presentation. These changes had no impact on previously reported results of operations.
(21) Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements
Effective from the year ended March 31, 2009, the Company adopted "Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements" (Practical Issues Task Force No.18 (“PITF No.18”) issued by the Accounting Standards Board of Japan on May 17, 2006) and made the necessary adjustments to the consolidated financial statements. PITF No. 18 requires that accounting policies and procedures applied by a parent company and its subsidiaries to similar transactions and events under similar circumstances should, in principle, be unified for the preparation of the consolidated financial statements. PITF No. 18, however, as a tentative measure, allows a parent company to prepare consolidated financial statements using foreign subsidiaries’ financial statements prepared in accordance with either International Financial Reporting Standards or U.S. generally accepted accounting principles. In this case, adjustments for the following six item s are required in the consolidation process so that their impacts on net income are accounted for in accordance with Japanese GAAP unless the impact is not material.
(a) Goodwill not subjected to amortization
(b) Actuarial gains and losses of defined benefit plans recognized outside profit or loss
(c) Capitalized expenditures for research and development activities (d) Fair value measurement of investment properties, and revaluation of
property, plant and equipment, and intangible assets (e) Retrospective treatment of a change in accounting policies (f) Accounting for net income attributable to minority interests
3. Securities
Acquisition cost, book value and the related unrealized gains or losses of the available-for-sale securities with available fair values as of March 31, 2009 and 2008 were as follows:
2009
Securities with book values exceeding acquisition costs:
Equity securities ¥3,975 ¥9,096 ¥5,121
Other securities:
Equity securities 250 119 (131)
Total ¥4,225 ¥9,215 ¥4,990
Millions of Yen
Difference Book value
Acquisition cost
2008
Securities with book values exceeding acquisition costs:
Equity securities ¥4,187 ¥11,769 ¥7,582
Other securities:
Equity securities 37 21 (16)
Total ¥4,224 ¥11,790 ¥7,566
Millions of Yen Book value
Acquisition cost Difference
2009
Securities with book values exceeding acquisition costs:
Equity securities $40,466 $92,599 $52,133
Other securities:
Equity securities 2,545 1,211 (1,334)
Total $43,011 $93,810 $50,799
Thousands of U.S. dollars
Difference Book value
Acquisition cost
Securities not stated at fair value as of March 31, 2009, and 2008 were as follows:
2009 2008 2009
Equity securities issued by subsidiaries and affiliated companies not consolidated or
accounted for using the equity method ¥7,951 ¥8,042 $80,943
Other securities:
Non-listed equity securities 63 76 641
Total ¥8,014 ¥8,118 $81,584
Thousands of U.S. Dollars Millions of Yen
4. Inventories
Inventories at March 31, 2009 and 2008 comprised the following:
2009 2008 2009
Finished goods ¥13,443 ¥20,253 $136,852
Work in process 1,068 1,739 10,872
Raw materials and supplies 4,566 6,475 46,483
Total ¥19,077 ¥28,467 $194,207
Thousands of U.S. Dollars Millions of Yen
5. Bank Loans and Long-Term Debt
Bank loans generally consisted of overdrafts from banks with interest rates ranging from 1.37% to 2.99% at March 31, 2009, and from 4.50% to 6.50% at March 31, 2008.
There was no long-term debt at March 31, 2009 and 2008.
6. Contingent Liabilities
A Company’s unconsolidated affiliate Alpine do Brasil Ltda.(“AOBR”)(100% owned by Alpine Electronics of America Inc.(100% owned)) had applied the reduction of import duty through the submission of a petition for qualification of industrialization. However AOBR was announced that its operation had not consisted industrialization and noticed a tax deficiency. AOBR commenced the administrative dispute procedure against the Federal Revenue Judgment Office in May 2003. In November 2006, the Federal Revenue Judgment Officer issued the notification of the decision mentioning AOBR must pay excise tax Real$2.0million, import duty R$1.4million, penalty R$2.5million, and arrears interest R$3.5million. AOBR instituted the administrative dispute and appealed to the Tax Payers’ Council of the Ministry of Finance in December 2006. Finally Tax Payers’ Council decided to approve the voluntary appeal of AOBR on June 18, 2008, and the notification of decision rendered by the Tax Payers’ council was issued by the Ministry of Finance on November 18, 2008. By this decision, it fully extinguishes the debt(s) of AOBR contained in the proceeding referred to above.
At March 31, 2009 and 2008, there was no pledge of collateral for long-term secured debt.
The Company has credit lines from banks, and the total unused credit available at March 31, 2009 was ¥10,000 million (US$101,802 thousand), and at March 31, 2008 was ¥11,000 million.
2009 2008 2009
Short-term loans ¥1,622 ¥216 $16,512
Lease obligations 284 — 2,891
Less amount due within one year (137) — (1,395)
Total ¥1,769 ¥216 $18,008
7. Provision for Retirement Benefits
Provision for retirement benefits included in the liability in the consolidated balance sheets and the related expenses for 2009 and 2008, which were determined based on the amounts obtained by actuarial calculations, were as follows:
2009 2008 2009
Provision for retirement benefits:
Projected benefit obligation ¥(9,689) ¥(9,594) $(98,636)
Unamortized actuarial differences 2,333 1,665 23,750
Pension assets 8,095 8,812 82,409
Prepaid pension expense (1,371) (1,552) (13,957)
Provision for retirement benefits: ¥ (632) ¥ (669) $ (6,434)
Thousands of U.S. Dollars Millions of Yen
2009 2008 2007 2009
Provision for retirement benefits:
Service costs – Benefits earned during the year ¥ 476 ¥ 450 ¥ 382 $ 4,846
Interest costs on projected benefit obligation 211 208 200 2,148
Expected return on plan assets (205) (229) (217) (2,087)
Amortization of actuarial differences 171 99 111 1,741
Additional retirement benefit — — 48 —
Other expenses (Defined Contribution, etc.) 144 134 144 1,466
Provision for retirement benefits ¥ 797 ¥ 662 ¥ 668 $ 8,114
Millions of Yen Thousands of U.S. Dollars
An overseas subsidiary has adopted defined benefit pension scheme in a multi-employer pension fund, and the subsidiary accounted for the expenses based on the amounts of contribution. The pension assets and liabilities of the whole pension fund were as follows:
Pension Assets ¥1,576 $16,044
Pension Liabilities 1,793 18,253
Surplus (Deficit) ¥ (217) $ (2,209)
The ratio of the subsidiary’s contribution to the whole fund was 27.0%.
Thousands of U.S. Dollars Millions of Yen
